Ceteris Paribus: How Zim can boost start-up funding

By The Independent | Aug. 12, 2022

At the same time, Zimbabwe often lacks the necessary start-up funding that start-ups from other parts of the continent seem to have enjoyed in recent years owing to its perennial macro-economic environment, a hostile investor climate and a negative investor perception among others.

Eben Mabunda ZIMBABWE often lags behind its neighbours in Foreign Direct Investment (FDI) Inflows. Between 2017-2019, South Africa, Mozambique and Zambia generated US$12,1 billion, US$7,2 billion and US$2,1 billion respectively while Zimbabwe attracted US$1,3 billion — ahead of Botswana’s US$800 million.

In 2021, Zimbabwe was missing from the about US$5 billion start-up funding received by innovators across the continent. However; seven months into 2022, a few Zimbabwean start-ups; “Flex-ID” and “Vaxiglobal” have put Zimbabwe on the start-up funding map for 2022. According to Business Insider, data from the Swiss Crypto Valley Venture Capital, or CV VC, shows that while African blockchain start-ups raised US$127 million in 2021 with funding for the first quarter of 2022 alone having already totalled U$$91 million — a 1,668% increase from this time last year

FlexID Technologies (formerly FlexFinTx), a blockchain start-up led by Victor Mapunga signed a ‘Simple Agreement For Equity’ (SAFE) with the Algorand Foundation earlier this year, to further develop and scale their Self Sovereign Identity (SSI) platform.

This undisclosed funding support followed Flex ID’s Algorand Foundation Development Award, which the team was awarded in 2020. Flex ID made history in 2021 as it became the first ever Zimbabwean start-up to be recognised as part of the World Economic Forum Technology Pioneers list. Having verified 1,2 million bank credentials in Zimbabwe over the past three years, FlexID now focuses on scaling user on boarding into the formal economy without compromising privacy.

The funding from Algorand is a giant leap for FlexID as it will unlock synergies with the Algorand Ecosystem —- arguably the world’s most developed blockchain ecosystem which is now getting more recognition. Just recently, Algorand was named the official blockchain partner for FIFA, the world’s football governing body. Vaxiglobal was also recently named among the first winners of the Kofi Annan Award for Innovation in Africa which attracted 330 applicants from 38 countries across the continent; receiving US$250 000 in the process — according to newzimbabwe.com

Co-founded by Dr Integrity Mchechesi, Vaxiglobal uses contactless biometrics to minimise the waste of immunisation resources, improve data quality with open standards and enable the scale-up of immunisation campaigns in African countries. The company’s solution uses a mobile phone to scan patients’ faces and create digital certificates in a cloud. Zimbabwe needs to be deliberate in terms of investing in the digital economy by way of internet infrastructural development, subsidising the cost of data (which is highly expensive regionally), offering tax cuts on corporations investing in digital infrastructure and intentionally setting up a thriving start-up ecosystem.

Notes can be taken from Latin America- a very welcoming and open market. According to TechCrunch; Latin America’s Startups raised U$$9,3 billion in just the first half of 2021, almost double the amount in all of 2020. In 2022 Q2, they have raised US$2,3 billion. The region’s ecosystem is hailed for its growing number of unicorns- the result of deliberate activities by governments in the region over the past decade

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The amount of VC capital and angel investment being funnelled into Latin American start-ups surged since 2017, however, much of this investment comes from local and regional investors. Every top university in Brazil has a pool of angels. Investors in the Andean region cover Peru, Chile and Colombia. If today’s ecosystem is flourishing, it’s largely because native investors are lighting the spark. To create this in Zimbabwe, investors need to dedicate teams and money to their local commitments. They will have to understand the local industry and be available to mentor founders with diverse perspectives.